David Baris was quoted in Evan Weinberger’s Law360 article, “FDIC Needs Improved Economy to Boost New Bank Creation,” on April 8, 2016.
Recent moves by the Federal Deposit Insurance Corp. to spur new bank formation show that the regulator has opened the door for new market entrants, but experts say that investors looking to start banks will still be hampered by low interest rates and other market conditions.
The FDIC on Wednesday shortened the period that new banks would be subject to enhanced supervision and capital monitoring as well as to a requirement that so-called de novo institutions submit any significant change in business plans for review. The creation of new banks all but stopped following the financial crisis, and the FDIC’s recent changes are a bid to ease some of the burdens that critics have said have caused that collapse in bank creation.
Investors and bankers looking to set up a new institution with a focus on providing banking access in rural and other underserved communities who are willing to accept somewhat lower margins will have more opportunity to do so with the new policy in place, according to BuckleySandler LLP partner David Baris.
“There are a whole lot of community banks that are not formed just because people think they can make money at it,” said Baris, who also serves as the president of the American Association of Bank Directors.
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